LEIGH SALES, PRESENTER: Is Holden shutting up shop in Australia or not?

General Motors is insisting it's not decided yet on the fate of its Australian plants, although the prestigious Wall Street Journal newspaper reported today that operations in Adelaide and Melbourne will close.

Tomorrow, Holden's Australian boss will give evidence to a Productivity Commission inquiry into car manufacturing against the backdrop of a political row over whether the Australian Government should protect ailing industries and companies to save local jobs.

Chief political correspondent Sabra Lane.

ANTHONY ALBANESE, MANAGER OF OPP. BUSINESS: If Qantas were to disappear, would that be acceptable?

NICK XENOPHON, INDEPENDENT SENATOR: The domino effect of Holden collapsing, of Holden closing in South Australia should not be underestimated.

TONY ABBOTT, PRIME MINISTER: They owe it to the people of Australia to say what they're doing. Are they staying or are they going?

SABRA LANE, REPORTER: They're both national icons, some believe, at risk of extinction, and they're lobbying for more taxpayer support to guarantee their survival. But in both cases, the Prime Minister's made it clear: neither should expect the taxpayer to come to their rescue. And specifically, Mr Abbott's warned General Motors to come clean about whether it plans to shut down plants in South Australia and Victoria.

TONY ABBOTT (Dec. 6): The message that we're getting from Holden is that they're in two minds. And I would like them to clarify exactly what their position is.

SABRA LANE: The request followed leaks from within government that Holden had already decided to shut up shop, but delayed an announcement. Mr Abbott's demand was provocative, requesting an answer that would pre-empt the findings of his own Productivity Commission inquiry into the sector. The commission is examining the entire industry, including what government assistance it receives compared with other nations. The inquiry will hear from Holden's Australian chief Mike Devereux tomorrow and will hand down an interim report at the end of next week. Regardless of what it finds, Mr Abbott's adamant: the taxpayer won't be forking out any more.

TONY ABBOTT (Dec. 6): There's not going to be any extra money over and above the generous support the taxpayers have been giving the motor industry for a long time.

SABRA LANE: The Coalition's longstanding policy is to cut $500 million in assistance to the sector. Some ministers argue Holden shouldn't be given any more help, that the company has a business decision to make that shouldn't be blamed on the Government.

ERIC ABETZ, GOVERNMENT FRONTBENCHER: But at the end of the day, Detroit and Holden internationally will have to be making some decisions.

SABRA LANE: The Opposition is seeking to exploit divisions within government. Nick Champion, whose electorate includes the Adelaide Holden plant, says the company hasn't made a decision.

NICK CHAMPION, ALP BACKBENCHER: The only people who are saying that are unnamed cabinet ministers who don't have the guts, don't have the guts to come out and put their name to their claims, who are briefing against their own government and who are creating a government that's really divided and confused on jobs.

JOE HOCKEY, TREASURER: The future of the car industry is in the hands of the car industry. And it's in the hands of the car industry in the same way that it was under Labor.

IAN MACFARLANE, INDUSTRY MINISTER: But at this stage we're not working on the pretext that Holden is leaving the country. We're working on the pretext that the industry will continue. They just want to frighten people about how many jobs might be lost if the chicken crosses the road. Madam Speaker, we are working on a solution for the car industry and we will continue to do so.

SABRA LANE: The Wall Street Journal's also reported this afternoon that Holden intends closing its Australian plants. The former Industry Minister dismissed the report as garbage.

KIM CARR, OPP. INDUSTRY SPOKESMAN: Same source has been provided this material to about three outlets. It's essentially being driven by the Liberal Party seeking to find an alibi for their indolence.

SABRA LANE: The senator says he was in discussion with the company prior to the September election. He says an additional government commitment to the company under $150 million year would be enough to keep Commodores rolling offer the Australian production line until 2025.

KIM CARR: Now I know that because of the advice that I was given, the detailed analysis that was undertaken while I was minister, the detailed deliberations that the Labor government undertook and the direct discussions with the company. I'm absolutely certain that if Labor had won the election, there would have been new contracts signed. There would be a commitment to invest that $1 billion and the industry would've been secured through to the middle of next decade.

SABRA LANE: If Holden decides to go, Kim Carr believes it would be curtains for the sector.

Could Toyota manage to stay in Australia?

KIM CARR: No, no. Look, we are facing an economic and social catastrophe. We will not see the economy recover possibly through to the end of the next decade. In terms of manufacturing, there would be profound losses in Victoria and South Australia, but it affects all states, right across Australia. There is just no doubt in my mind there would be hundreds of thousands of workers put out of work. There would be - of course, all their families would be affected. They will end up with - if they do get work, in jobs that pay less, are less productive and may - less secure.

SABRA LANE: Economist Nicholas Gruen helped the former Labor Industry Minister John Button devise the so-called Button Car Plan in the '80s, which rationalised the sector and resulted in lower tariff protection.

NICHOLAS GRUEN, CEO, LATERAL ECONOMICS: We're all focused on one question, which is: are you a free trader or a protectionist? In fact, there is a bipartisan commitment from the politicians - you can criticise it or not - to pay billions to the industry over the next five years, or seven years. And so let's focus on the question: what is the best way of spending that money to end up having a situation where it isn't good money after bad, but it actually might buy our way towards a viable industry?

SABRA LANE: He believes the industry could survive a cut in government assistance, but says it would mean finding new owners.

NICHOLAS GRUEN: It isn't about the money. It is about understanding that the assets we have in Australia, the automotive assets that we have in Australia, are pretty high-quality assets. They need to find a place in a global supply chain which is a strategically important place. And the American owners of the Holden and Ford assets have no such place for those assets.

SABRA LANE: The South Australian Premier will fly to Canberra on Thursday to hold talks with the Prime Minister about Holden's future.